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What will be the new beta of the portfolio for abc

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Reference no: EM132856781

Problem 1: ABC hold a diversified portfolio consisting of a $10,000 investment in each of 10 different common stocks. The portfolio beta is equal to 2. You have decided to sell one of your stocks, a lead mining stock whose beta is equal to 2.0 for $10,000 net and to use the proceeds to buy $10,000 of stock in a steel company whose b is equal to 1.0. What will be the new beta of the portfolio?

Option 1: 1.86
Option 2: 1.98
Option 3: 1.90
Option 4: 1.94

Reference no: EM132856781

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